Monthly Report - May 2020

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A post shared by butainvestor (@butainvestor) on Jun 1, 2020 at 5:31am PDT

Comments:

All funds except for P2P Lending & Principal China saw a month on month increase as more countries are reopening from the COVID19 lockdown. We see an average rally of 4.5% this month with United ASEAN leading the way. That said, there are major countries where the COVID19 situation is actually worsening like Russia & Brazil. However, my funds have no weight in said countries.

   Due to China's recent approval of a new security law over Hong Kong which could potentially threaten HK's democracy, a few of the HK weighted funds suffered from hampered gains. These could be clearly seen in Principal China and to a certain extent, Manulife REIT & StashAway.

   Wait, StashAway? Investing in Asia? So they made a big move to reoptimize its portfolio some time in the middle of May. The previous highest risk allocation of 88% US & 12% EU has suddenly turned into 40% US, 40% Asia & 20% Gold, essentially shifting their focus from west to east. Reason for this is StashAway foresees that the USD may lose its value as a result of their aggressive Quantitative Easing measures (i.e. money printing). They cited that the USD depreciated 21% against the RM between 2009 & 2011.

   Manulife REITs is still in the deep red because real estate (Retail & Hotel) took a major hit from the COVID19 lockdown. Fallen rents and rise in vacancies have reduced the profitability of REITS. It may take a while before this fund can re-enter the green zone.

   The decrease in returns from P2P Lending is expected. More borrowers are struggling to make on time loan repayments as the COVID19 lockdown takes a toll on their business. A lot of them resorted to restructuring (lengthening) the repayment schedule and some barreling towards default.

   It is nice to see that my overall Money Weighted Returns (MWR) sitting pretty at 4.1% p.a. which is above my modest target of 3% p.a. (Fixed Deposit rate). Best part is, the economy has not fully recovered yet so we could see an even more respectable MWR in the coming months.

   The higher net cash flow this month is due to (1) undertaking of home loan moratorium and (2) lower spending as a result of lock down. The additional RM3,000+ fund has been fully invested into StashAway.

Forward Strategy:

No change in minimum monthly investment allocation, i.e. RM1,500 into FSM Mutual Funds and RM500 into StashAway. I will also continue to take up the moratorium and inject the additional RM3,000 cash into my investments.

   I am not happy with StashAway's recent decision to hold 20% Gold ETF (GLD) in their portfolio. This is definitely not in line with my "full aggressive" goal and I could be potentially missing out on any huge gains during these volatile times. However, I will continue to stay invested. On the sideline though, I'm considering to get myself registered with an international broker in case StashAway's re-optimization proves to be.. sub-optimal.

Fund Report - StashAway (May 20)

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A post shared by butainvestor (@butainvestor) on Jun 1, 2020 at 7:44pm PDT

Fund Description: 

StashAway is a Malaysian robo-advisor app which allows me to access index funds in the NYSE. I am currently invested in the most aggressive portfolio hence why you see a lot of sector-specific funds.

Comments:

StashAway made a big move to reoptimize its portfolio some time in the middle of May. The previous allocation of 88% US & 12% EU has suddenly turned into 40% US, 40% Asia & 20% Gold, essentially shifting their focus out from USA (more specifically the USD). Reason for this is StashAway foresees that the USD may lose its value as a result of their aggressive Quantitative Easing measures (i.e. money printing). They cited that the USD depreciated 21% against the RM between 2009 & 2011.

   So how does refocusing investments in Asia help us against the potential USD depreciation? Let us take a NYSE-based ETF that deals in RMB (China). Currently, RMB100 can only buy USD10 worth of ETF in NYSE. After the USD has depreciated, the same RMB100 will be able to buy USD15 worth of ETF in NYSE. The 50% in depreciation of USD does indeed decrease the value of the ETF but it is offset by the 50% purchasing power of the RMB. Compare this to a pure NYSE-based ETF investing in US markets, there is no other Asian currencies to help hedge against the USD depreciation.

   I am coming to terms with their decision to move the portfolio from West to East however, I am still in disagreement with the 20% gold holding. There are a few reasons to this: 

1. It does not align to my goals to hold a fully aggressive portfolio
2. As the economy recovers from COVID19, this GLD holding is essentially missing out on the rebound
3. It feels like they are buying GLD at a peak as investors begin to regain confidence in the stock market and divest from safe haven assets.

   It is definitely not helping their case as every fund made month on month gains EXCEPT Gold. Anyway, I am exploring the possibility of opening up a foreign brokerage account and directly investing in ETF from the NYSE. That said though, it is not looking very promising i.e. very complicating because Malaysia does not encourage the use of foreign brokerage.

Monthly Report - April 2020

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A post shared by butainvestor (@butainvestor) on May 8, 2020 at 10:32pm PDT

Foreword:

Green everywhere! Staying invested during these troubled times have definitely paid off. The recovery is mainly attributed to the easing of the COVID19 situation. Countries are reopening up in stages. Oil price continue to weaken due to low demand. On 21st April in fact, it went down to negative territory. However, the market was quick to brush it off and continue its climb. It's not back to pre-COVID19 levels but it is getting there.

Analysis:

The equity funds rallied the most at about 10 - 30% increase within the month of April. The technology & healthcare sector did very well to weather the storm and emerged positive.

   The ASEAN market is lagging in overall recovery due to its relatively larger drop last month compared to its peers (USA, Europe & China).

   The higher net cash flow in this month due to (1) undertaking of home loan moratorium and (2) lower spending as a result of lock down. The additional cash has been invested into United Global, StashAway and Principal China Fund.

Forward Strategy:
No change in minimum monthly investment allocation, i.e. RM1,500 into FSM Mutual Funds and RM500 into StashAway. Any additional saved cash will be added into the same funds.

Fund Report - United Global Quality Equity Fund (Dec 19)

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A post shared by butainvestor (@butainvestor) on May 9, 2020 at 6:32pm PDT

Fund Description:

This fund invests in large cap companies globally with huge holdings in United States.

Comments:

According to the fund report, huge weight has been purposely put into the tech sector and the bet paid off handsomely in 2019. I am hoping they still maintain the same allocation going into 2020 as both the highest % sectors (technology & healthcare) fared the best during this COVID19 + Oil Price crash event.

Fund Report - StashAway (Apr 20)

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A post shared by butainvestor (@butainvestor) on May 7, 2020 at 9:22pm PDT

Fund Description: 

StashAway is a Malaysian robo-advisor app which allows me to access index funds in USA. I am currently invested in the most aggressive portfolio hence why you see a lot of sector-specific funds.

Comments:

The month on month chart shows that all the funds have made huge profits in Apr-20. In the big picture however, this fund basically rebounded almost to pre-COVID19 levels so it is about a net zero gain between Feb-20 to Apr-20. That said, I am not complaining and if anything, quite grateful. It could have been so much worse.

Fund Report - Manulife Investment APAC REIT Fund (Feb 20)

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A post shared by butainvestor (@butainvestor) on May 7, 2020 at 7:00am PDT

Fund Description:

This fund invests in Real Estate Investment Trusts (REITs) in Asia Pacific. It is focused in highly developed financial and commercial hubs, namely Singapore & Hong Kong.

Comments:

The lockdown due to COVID-19 has put a serious dampener on the NAV. That said, I'm glad they did not attempt to go defensive by holding more cash (still maintain 5 - 6%). In fact, the following statement by the fund manager brings a lot of relief, "... the sell-off creates opportunities to buy into names with sustainable quality yields."

Fund Report - United ASEAN Discovery Fund (Feb 20)

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A post shared by butainvestor (@butainvestor) on May 7, 2020 at 5:57am PDT

Fund Description:

This fund invests in Small-Medium companies in South East Asia. Basically, a Growth Stock fund. It also tends to be a very volatile fund so it works very well with the DCA method.

Comments:

Due to the current trying times, the fund decided to hold more cash (25%) than usual (10%) by reducing their exposure in Indonesia. It insinuates that they could expertly time the re-entry into the market which we know even the best of the best have problems doing. If it were up to me, I'd keep 100% of the funds invested to ensure I do not miss out on the rebound. Anyway, we will track how they fair from my monthly reports.